3. Bilateral & Unilateral Contracts

A bilateral contract is a contract formed by an exchange of promises regarding an obligation to be performed in the future. Amana Suits Hotels Ltd. v. P.D.P. (2007) 6 NWLR (Pt. 1031) 453 at 478 Para. F (CA).

A unilateral contract involves the making of a promise by one party and the actual performance by another party based on that promise. It is unilateral because only one party makes the promise and the other party enters into the contract by acting, as he is otherwise not obligated to act. Amana Suits Hotels Ltd. v. P.D.P.;Carlill v. Carbolic Smoke Ball Co.

FORMATION OF A CONTRACT

A contract is formed if the following elements or ingredients co-exist:

Offer

“An offer is a definite undertaking or promise made by one party with the intention that it shall become binding on the party making it as soon as it is accepted by the party to whom it is addressed.” Orient Bank (Nig.) Plc v. Bilante;Ojo v. ABT Associates Incorporated [2017] 9 NWLR (Pt. 1570) 167 at 188 CA.

In unilateral contracts, once performance commences, the offeror cannot revoke the offer as acceptance is taken to have been made; but completion of performance is a condition precedent to the offeror’s liability to perform his promise. Errington v. Errington; Hassan v. Obodoeze (2012) CA/J/172/2006.

If notice of revocation reaches the offeree through a reliable third party, it is valid. Dickinson v. Dodds.

Lapse of Time

Where an offer is said to be open for a specific period, it will lapse (expire) at the end/expiration of the stated period. Amana Suits Hotels Ltd. v. P.D.P.

Where the offeree has notice of the death of the offeror, the offer is gone.

Where the offeree does not have notice of the death of the offeror, the offer cannot lapse if the estate of the deceased offeror can perform. Bradbury v. Morgan.

Rejection

The offeree has the option of acceptance or outright rejection of the offer. Amana Suits Hotels Ltd. v. P.D.P.

Rejection of an offer by the offeree terminates the offer.

A rejection can only terminate an offer when communicated to the offeror. Until then, the offeree can accept the offer before any notice of rejection reaches the offeror.

A counter-offer (see below) is an expression of rejection of an original offer.

Acceptance

Acceptance means an expression of assent to the terms of an offer.

“An acceptance of an offer is the reciprocal act or action of the offeree to the oferror in which he indicates his agreement to the terms of the offer as conveyed to him by the offeror.” Ojo v. ABT Associates Incorporated.

There cannot be an acceptance if there is no offer, as both must necessarily be linked to one another.

Where the terms of offer expressly or implicitly requires that acceptance must reach the offeror.

Where the application of the rule would amount to absurdity and extreme inconvenience.

Where the letter of acceptance bears the wrong address of the offeror or not properly stamped.

Where the acceptance letter was not properly posted.

Counter-offer, Cross-offers, Acceptance in ignorance of offer.

A qualified or conditional acceptance is not an acceptance.

Conditional acceptance may be in the form of acceptancesubject to contract. UBA v. Tejumola (1988) 19 NSCC (Pt. 1) 945; Cohen v. Nessdale.

“Subject to Contract” simply means a contract made subject to fulfilment of certain terms.

Where a contract is made subject to the fulfilment of certain specific terms and conditions the contract is not formed and not binding unless and until those terms and conditions are complied with or fulfilled. Best (Nig.) Ltd. v. Blackwood Hodge (Nig.) Ltd. (2011) 5 NWLR (Pt. 1239) 95.

Conditional/qualified acceptance could at best be a counter-offer.

A counter-offer cancels the original offer and becomes a fresh offer subject to acceptance. The legal effect of a counter offer is to repudiate or discharge the original offer so that it cannot subsequently be accepted by the offeree. Best (Nig.) Ltd. v. Blackwood Hodge (Nig.) Ltd.

There cannot be acceptance in ignorance of offer. The party accepting must be aware of the offer and its terms.

An offer made to another in ignorance that the offeree has made the same offer in like terms to the offeror cannot amount to acceptance. What we have are merely cross-offers.

Consideration

Consideration simply means something of value in the eyes of the law exchanged by parties to a contract.

Consideration is the inducement to a contract. it is the cause, motive, price or impelling influence which induces a contracting party to enter into a contract. It is the reason or material cause of a contract. Ojo v. ABT Associates Incorporated.

Only a party who has furnished consideration can enforce a contract. Cardoso v. The Executors of the Late J. A. Doherty.

Proof of consideration is not required in contracts under seal.

Consideration could be in the form of:

Some right, interest, profit or benefit accruing to the one party; or

Some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other. Currie v. Misa.

Illusory promise is a promise that is unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform.

Moral obligation. (Already mentioned above).

Lesser payment/performance in discharge of an obligation/ debt:

The general rule is that part payment of a debt or payment of a lesser sum cannot be satisfaction for the whole as same does not amount to good consideration. Pinnel’s Case; Foakes v. Beer; Panabiz Intl. Ltd v. Addidon Nig. Ltd. (2016) LPELR-41350(CA).

It is taken that no consideration was furnished for the balance forgone.

It is immaterial that the plaintiff consented to the lesser payment/performance.

Exceptions:

If upon the creditor’s request and acceptance, part payment is made before the due date, then the payment is good consideration.

Payment of a lesser sum to be made at a different location upon the creditor’s request and acceptance is good consideration.

If upon the creditor’s request and acceptance, a different item is provided by the debtor in satisfaction of the whole amount, it is good consideration.

Above all, if it will be unjust for the plaintiff to insist on the full sum/performance after consenting to the lesser payment/performance, the plaintiff would be estopped from insisting on his strict legal rights. This is called equitable or promissoryestoppel. See Central London Property Trust Ltd. v. High Trees House Ltd (The High Trees case); Combe v. Combe; Also Estoppel by conduct. Section 151, Evidenc Act, 2011. See A.G. Nasarawa State –v- A.G. Plateau[2012] 10 NWLR (Pt.1309) 419.

NB: The underlying point is that the introduction of a new element as seen above may be of some more beneficial interest to the creditor. In which case, the debtor is deemed to have furnished consideration.

Requirements for the operation of promissory estoppel:

There must be in existence two contracting parties who are contractually bound, or who but for the representation could have been contractually bound;

There must be a representation relied upon resulting in something different from what was agreed between the parties. It is not necessary that there should be detriment in the sense of loss or damage suffered by the party relying on the representation or promise;

The representation is not necessarily supported by valuable consideration. It is sufficient merely if it is a promise which has been relied upon.